But CNN has learned that there's a spy angle to this case. Federal counterintelligence investigators say they believe some of the alleged participants in the fraud scheme were also engaged in espionage, sources tell CNN. Federal Bureau of Investigation agents were on the trail of the alleged spies for some time, sources say. But in the end, the Justice Department decided to bring only the fraud charges.
There are 49 people charged in the case - 25 current and former Russian diplomats and 24 of their spouses. But only 11 of them remain in the U.S. and all have diplomatic immunity. So unless the Russian government waives their immunity - which is unlikely - they can't be arrested. Instead, the State Department is expected to seek to have them sent home.

The case comes amid some tensions in U.S.-Russian relations over a variety of issues, from Syria and Iran to the Russian asylum granted to former National Security Agency leaker Edward Snowden. Counterintelligence officials say Russian spying activity in the U.S. is back to near Cold War levels.

In 2010, the FBI rounded up a group of Russian sleeper agents who were part of what the U.S. called the Illegals Program. Ten people who posed as academics and business people were arrested, including Anna Chapman, now 31 years old. She posed as an entrepreneur and socialite, and garnered the most attention for her glamorous looks. Vice President Joe Biden joked on a talk show that he wouldn't have sent her back to Russia.

The U.S. and Russia conducted a spy swap to resolve the issue, after the 10 spies pleaded guilty. Another alleged Russian spy in the group fled after being arrested in Cyprus. And a 12th was deported.

While the Illegals used sophisticated communications methods to avoid detection, the latest group charged is portrayed in court documents more as common fraudsters.

It couldn't be learned how many of the 49 charged last week are suspected of spying and what type of activity the FBI investigators in New York and Washington believe they were involved in. But Manhattan federal prosecutors believed they didn't have enough evidence to bring espionage charges, one source said. In any case, U.S. officials view the fraud charges as more embarrassing to the Russian government.

Manhattan U.S. Attorney Preet Bharara accused the 49 charged in the fraud case of "picking pockets" in the U.S. "Here, as alleged, a multitude of Russian diplomats and their spouses ran a scam on a health care system designed to help Americans in need," Bharara said.

The accused work as mission, consulate and trade representatives in New York, although one also once worked at the embassy in Washington. The Russian government normally pays for medical costs of their employees, and those employees' children aren't generally eligible for U.S. citizenship at birth.

According to prosecutors, the diplomats falsified Medicaid benefits applications, under-reporting incomes or reporting no income to qualify. While they got benefits, they had a taste for high-end shopping, spending thousands at stores such as Tiffany and Bloomingdale's.

One former Russian diplomat charged is named Timur Salomatin, who with his wife, Nailya Babaeva, applied for Medicaid pregnancy benefits in November 2010 and represented Salomatin's salary to be $3,000 a month, and later $4,400 a month. The family got almost $31,000 in fraudulent Medicaid benefits, prosecutors say. While getting Medicaid benefits last year, the couple spent $50,000 on purchases from retailers such as Apple, Prada and Bloomingdale's, prosecutors allege.

soundoff(112 Responses)

So, typical of Russian, Chinese and Cuban Communist's – one scam leads into another. If they are not engaging in corporate espionage, then they are hacking computers and if not that then they are selling fake Cuban cigars - IN CUBA! Now, how is that possible? Communism is Theft...

I was born in Russia. My opinion: Kick them out. Revoke their kids' American citizenship. And never let them back to this country. This would be the best punishment for them. Shame on Russian government for protecting them.

Thank you, you made it chrystal clear what is is al about: it is just a public stunt to make American people feel outraged.

Some American peple are simply too short-minded to even bother to read the article before expressing their judgement. To bad for American People. You managed to concentrate your outrage and your stupidity just in three lines.

There is no need to kick them out of the country: all of them already left. Some several years ago.

There is no need to revoke US citizenship of theit kids: then never has it and never applied for it. Besides, kids are 100% innocent.

Shame on Russian Government? May be. Putin still provides free medical care to foreing diplomats in Moscow. That is tupid, indeed.

In the second place, Harrison and his ilk believe that the Displaced Person is a human being, which he is not, and this applies particularly to the Jews, who are lower than animals.
– Diaries, General Patton : A Soldier's Life (2002) by Stanley P. Hirshson, p. 661

The point is, pretty much every country knows what a wimp Oblameo is. Don't cross this line, ooops I mean this line, errr I mean , well you get the point. He wont fire Sebelious who just wasted a billion bucks, you think the inept one is going to anything ??? think again

I guess they have learned all the lessons of the market economy after all 🙂 which were taught them during the 90s 😉
The chicken come home to roost... should I say.
By the way, just in case you've missed it: Apple products cost ~30% more in Europe and Russia. They used saved money to buy Apple products for future retail and they transferred gadgets through the customs using their diplomatic status. Such "creative" and "entrepreneurial" fellows :)))

CNN has "closed comments" on the Cruz story and Gingrich story. Why? Is there really Free Speech on these CNN posts if CNN decides which stories people can speak about and which ones will be closed? Is that free speech? Who is in the back room deciding? Carl Rove? The time has come to tell it like it is. CNN IS FOX LIGHT.

For Medicaid and Medicare fraud, federal law establishes
(1) a civil statute of limitations of six years (42 U. S. C. § 1320a-7a(c)(1)), and
(2) a criminal statute of limitations of five years (18 U. S. C. § 3282).

So why did FBI and prosecutor Preet Bharara waited for so long before filing the charges?

Half of the counts in the Indictment goes strait to trash bin because they already expired.

And, we are going to buy helicopters from Russia at million$ of US taxpayers expense to be used by the Afgans! How is this being allowed? What, can't we make helicopters? Also, didn't the US Govt. pay a firm outside of the US to design the failed website for Obamacare? Don't we have any people here who could do this, but, hopefully better!

It's a little bit different. Mi-17s have reliable, cheap to fly and service design form 60s. Plus if there are any chopper pilots left in Afghanistan, they flew Mi-8/17. I'd say US-built choppers are very nice, but come on they won't last long in those conditions and with Afghani techs.

Glad they caught 'em, but the investigation alone cost more than what was being pilfered. Get back to me when the billions of dollars of fraud and waste Obama said could be realized in savings on Medicaid alone get found.

There are tens of thousands of Russians in Brooklyn scamming the system right now. Between elderly Russians being shuffled to medical mills for bogus medical treatments and an entire cottage industry catering to fradulent personal injury suits its costing American taxpayers billions of dollars every year.

Russian woman had sagging chests, America has great plastic surgeons so why wouldn't these Cossacks use our Medicaid for it would be an embarrashment to go home without the best thing America sells... Bigger Breasts

I agree with Sam. The Medican and the wealthy Chinese are coming to the US to have their babies. These babies get the US citizenshipautomaticcally. These babies are called anchored babies.
We need to change the rule so that only babies born by permanent residents or US citizens can have US citizenship or in the future our beloved country will belong to Chinese and Mexican.

So CNN says Russian spies have defrauded US medicare for what: $1.5 M... They used 49 people from UN Diplomatic Corpus to help them with the scheme: so altogether achieving such a spectacular result! CNN sheep are left horror-struck by the news!

Are you serious? Even AFTER these oversights are pointed out, the government goes right on doing the exact same BS. I still remember the $400 hammer stories from 60 minutes years ago and guess what? It's even worse now. We could actually cut taxes and save many, many BILLIONS just on cutting waste alone, if we ever got anyone in Washington with the brains and stones to actually do something.

And God forbid we shouldn't pay a few hundred in taxes.....slap the cuffs on! Take the house!

December 9, 2013 at 5:02 pm |

Dieter621

Isn't this great? We are not able to police one medical system but want to install a larger one. The corruption of our system is beyond compare. There are no checks and balances because of the spineless politicians not only in DC but at the local level. This isn't even the tip of the iceberg, just look at the federal loan programs that are being abused for countless millions of dollars without anyone to investigate. The politicians that steal millions upon millions and get caught not even paying taxes seem to be exempt from laws so why bother with any of this. America has become a rotting carcass with jackals tearing off their piece of meat while the citizens stand by and watch as it is devoured.

...and exactly why are we giving benefits to non-US citizens? Time to put the brakes on our generosity.... Until there is not a single American citizen hungry homeless or sick should a hand be extended to non-US citizens. Our once great country is being bled dry by those that have no respect for us or our laws and have no interest in contributing to our society. Same goes for our foreign aid. Why are we giving our precious resources to these countries that hate and resent us so much. Bugger off.

We shouldn't be giving benefits to non-citizens but if these people are diplomats they definitely not using nor needing medicaid. This article, or maybe the entire case is missing some very substantial details. For starters, foreign diplomats on Medicaid just doesn't add up. Secondly, the amount mentioned – $1.5 million for 9 years, for 49 people – that's only $3.4K per person. Definitely not something to be enough for all those "luxurious vacations and watches" that the chart in the picture describes. An average medicaid user is probably overcharged annually 3 times of this. Looks like this is just a silly attempt to create negative publicity after the Snowden asylum.

Well, what do you expect? We, the people, seem to be condoning our government keeping more things secret, even ourselves. We've allowed ourselves to be frightened into giving up all kinds of rights and trust by the slimely politicians we currently have representing us. I'm talking to you Boehner, and I'm talking to you, too, Mr. President. You guys are allowing us to become a bunch of sneaky little weasels for all the wrong people, and for all the wrong reasons. Sucking it for the money has degraded us from a once bright beacon of hope to a cadre of shadowy weasels protecting the greediest among us. Snap out of it, would you? As Americans, we may not be that bright, but we're not that communally stupid, even taking into account the number of poorly educated, right-wing morons currently all over Fox News.

Time to change the immunity law to exclude civil criminality. That the Ruble and Russia's wealth was utterly pillaged by western banking interests during the collapse of the Soviet Union is well known but that shouldn't excuse this.

This is called saving a card for a rainy day: AKA diplomacy. They were probably caught years ago and this was being held in the hold so when something like Snowden comes up we can play that card. In a few months, the Russian's will find a spy or show evidence of a US diplomat doing something.

Can you even form a thought without associating it to divisive politics? How many times per day do you say the word "liberal"? Does Fox News have a rewards program for that level of brainwashing?

Seriously, wouldn't it be great not to always assign political tags on everybody? Surely you know Americans are not all either "liberals" or "right-wingers". Maybe it's time to stop allowing the media's talking-heads to divide our people into hate clubs...

December 9, 2013 at 1:54 pm |

Person of Interest

Diplomatic status's are tricky. Many foreign workers and operatives are granted diplomatic immunity even though they are not "diplomats." You don't want to call someone a Russian Diplomat, who is the shooter on the protective detail but you also want to get the point accross that they have diplomatic immunity. There isn't always a clear line on what is what, when you have another country claiming something. Odds are Russia Blacketly stated they were all diplomats and therefore that is what was passed on here.

It has nothing to do with a particular political bias no matter what a troll will tell you.

Diplomat is a person who (1) has diplomatic passport and (2) is given a special accreditation from the receiving country. It is a simple as that: the receiving country must formally accept the person to serve as diplomat. This is the internationally adopted procedure.

December 9, 2013 at 11:26 pm |

Alex279

In contrast, US often tries to extent diplomatic immunity to other categories of people, like regular military personnel in Iraq and Afghanistan (as opposite, say to military attache in Embassy). No self-respecting country would ever accept that.

December 9, 2013 at 11:32 pm |

Bullfeathers

Russia is the largest kleptocracy in the world, these guys were just emulating Putin and gang.

I think we should get rid of immunity, for diplomats and for senators. Russians are known for abusing this privilege. In NYC, they park their cars as they wish, handicapped spaces, fire hydrants, they laugh in the face of police and traffic officers because they think they are unteachable. This is not what immunity should be about.

I think all these charges don't even make sense. How are Russian diplomats on Medicaid? Besides, $1.5 mil over 9 years over 49 people comes out to just $3.4K a person. This is miniscules amount, something a regular doctor routinely overcharges through the year on a regular patient. All these charges just look like a cr@p shoot to me, they don't make any sense and mostly likely this is just a petty publicity action, to retaliate after the Snowden asylum.

I'd say it's like $20k/year per household.
1500000/3/25=20000
25 diplomats and 24 spouses = 25 households
9 years, but embassies have staff rotation period of 3 years.

December 9, 2013 at 2:42 pm |

Alex279

Not respecting diplomatic immunity is very bad idea because US diplomats are actually much more exposed, and often work in countries who are quite hostile to US.

Instead, as far as parking next ti fire hydrants - there is a much easier solution: a tow away truck.

Then, to get you car back one has to pay to towing compay, which is technically a private company charging for their services. State, Juistice system and municipality are technically not involved so diplomatic immunity does not apply here.
E.g., try to park your car in parking lot a grossery story for half a day and go elsewhere for the whole day. You cannot be issued a parking ticket because you do not violate any traffic law. Nevertheless, store manages may be not vey happy and call for tow truck. See the difference?

Huh? What has this to do with birthright citizenship? Children born to foreign diplomats aren't eligible for U.S. citizenship. It's clearly stated in the article that the kids aren't U.S. citizens. You need to pay more attention to facts and less to emotion

Wrong on the numbers and a silly basis for comparison; all systems have waste and that has no relevance to the morality or practical problems of people stealing from the budget funding the system. What are you smoking?

December 9, 2013 at 6:44 pm |

Post a comment

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

Search Security Clearance

Share this blog

About this blog

CNN's Security Clearance examines national and global security, terrorism and intelligence, as well as the economic, military, political and diplomatic effects of it around the globe, with contributions from CNN's national security team in Washington and CNN journalists around the world.